Oct 29, 2017Everywhere you look, the Internet of Things is becoming interwoven into our day-to-day lives. We see it in our homes through our thermostats and entertainment systems, as well as in refrigerators, all of which stream data to the internet. This proliferation of the IoT and smart devices in all aspects of life presents companies with new ways of engaging with customers and consumers. That opportunity will only get bigger, according to analyst firm Gartner, which predicts that the number of total connected devices will reach 25 billion by 2020. One industry that is expected to reap tremendous benefits from the IoT is the supply chain.
Beyond the obvious supply chain role of getting connected devices from factories and warehouses into the hands of users, the IoT is part of a new wave of innovation for the global logistics industry, bringing with it a level of efficiency that supply chain professionals from years past would not have experienced. Here is a closer look at how the IoT is ushering in the next-generation supply chain.
Operational Visibility
Before the connected world came to be, manufacturers and their partners made decisions based on data that was days, weeks or even months old. But in today's world, real-time information is driving smarter decisions and more efficient operations. based on up-to-the-second changes in market conditions that give us a better sense of supply and demand and help us anticipate issues with upstream supply chain partners. This saves time, money and resources.
The visibility enabled by the IoT means information can be shared not only in real time, but at every level, thereby allowing deficiencies to be identified quickly so that problems can be immediately rectified, or prevented altogether. Rather than relying on anecdotal information from different teams spread across disparate locations, management can easily access a real-time snapshot of supply chain analytics and make decisions accordingly.
A New Wave of Customer Expectations
Meeting increasing customer demands is one of the primary concerns of the global supply chain and logistics industry, and in the era of instant gratification, the IoT is essential to delivering customer satisfaction. Not only do customers want real-time information regarding where their product is located and how long it will take them to receive it, with companies boasting same-day delivery, consumers' appetites for convenience and instant gratification have drastically increased. With the push of a button, shoppers can have a new iPhone delivered that same day, or have a week's worth of groceries arrive at their doorstep within the hour.
With the IoT comes greater flexibility for customers as well. Manufacturers realize that customers are shifting behavior and looking to upgrade pre-loaded base models of their products with additional features that can be updated instantly via the internet for a one-time fee, a subscription charge or a pay-as-you-go model. What this means is that today's customers expect products and services exactly when and how they want them. This is why businesses will need to adapt to new models in order to transform the value of the IoT into revenue potential through customer service and satisfaction.
Recognizing this, companies leveraging the IoT in their supply chain are able to take instant gratification to the next level to deliver the ultimate in customer experience. We are entering a time when customers will not need to re-order anything. Smart organizations will not only collect data on the performance of a given device, but also look at how tha customer is using said device. When a product gets low, replenishment actions are triggered automatically and arrive to the customer before they need to re-order themselves. Is a device defective? Not a problem. When a device is connected to the IoT, smart organizations can collect and analyze data in real time to set up maintenance schedules, proactively intervene when a device needs servicing and gauge long-term device performance trends that will help the company to drive future improvements. If need be, a new device will be automatically shipped before the customer even recognizes there is a problem.
By allowing companies to redesign supply chain processes for greater efficiency, the IoT is helping organizations to dramatically reduce the amount of time from click to fulfillment. This makes the process of receiving products easier than ever, simultaneously increasing customer lifetime value and loyalty.
The Bottom Line
All points along the supply chain are dependent on each other to run smoothly, and the increasing connectivity between them is creating levels of visibility we would have never thought possible just a few short years ago. The result is a well-oiled machine that optimizes efficiency across the entire product lifecycle, from production through end-user consumption.
Ultimately, the rise of the IoT is bringing about a singular shift in how companies operate, and our power lies in our ability to curate, manage and leverage this IoT data from partners, suppliers and customers, and to effectively turn it into actionable knowledge.
Carsten Krause is ModusLink's VP of enterprise architecture and chief information security officer.
